Our proven model shows that Danaher is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Earnings Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +1.05%. This is a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #3 (Hold): Note that stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings. Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of Danaher’s Zacks Rank #3 and 1.05% ESP makes us very confident of a positive earnings beat on Jan 28.

What is Driving the Better-Than-Expected Earnings?

The company’s well-managed distinct business policy of gradually evolving as a healthcare company, planned acquisitions and a competent operating outlook are all catalysts that will help the company achieve an improved financial performance. Besides a strong balance sheet, an $8 billion capacity for mergers and acquisitions will help the company strengthen its position in 2014. Further, the company has strategically diversified its business geographically and expects to enjoy robust growth in emerging economies like China. Additionally, Danaher functions through its business system viz. Danaher Business System, which helps innovate new products. This system primarily focuses on structured product development, strategic sourcing and efficient manufacturing.

The positive trend is seen in the trailing four-quarter average surprise of 0.74%, which was greatly helped by the 1.20% surprise in the last reported quarter. This was possible because Danaher reported strong growth across four of its five business segments. Further, the company also benefited from a 3.0% increase through acquisitions.

Other Stocks to Consider

Danaher is not the only firm looking up this earnings season. We also see likely earnings beats coming from these companies: